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Company Given $400M East Side Access Contract Previously Defrauded MTA

By Ben Fractenberg | February 5, 2015 7:11pm
 A layout of the East Side Access project to be completed by 2022.
A layout of the East Side Access project to be completed by 2022.
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MIDTOWN — One of the two companies awarded a $400 million contract to build the new Long Island Rail Road concourse at Grand Central Terminal for the East Side Access project had recently paid a $20 million settlement to the federal government for defrauding the MTA.

Schiavone Construction, which was linked to the mob in a 2005 affidavit, was also one of the companies hit with safety violations after the Second Avenue Subway explosion in 2013, the Daily News reported.

Schiavone has been given a number of major city contracts including a water filtration plant in The Bronx and the Second Avenue Subway, according to the New York Times.

Schiavone reached the settlement with the feds in the fraud case in November 2010 after it was investigated for lying about using minority and women-owned businesses for projects worth $700 million, the Brooklyn U.S. Attorney's Office said in a 2010 press release.

Two of the contracts were for rehabilitation work at the Times Square and South Ferry subway stations, which the construction company started in 2002.

Then in 2004, the company began work on two more contracts with the DEP for construction of the Croton Water Filtration Plant, according to the Eastern District.

Just two years after the settlement, Schiavone was awarded a contract to provide ventilation in the tunnels connecting Queens with Grand Central for the project.

The MTA announced on Thursday that it was awarding Schiavone and John P. Picone Inc. a $404.8 million contract to build the 373,000 square-foot concourse and ventilation plants at 44th and 50th streets.

There are options to increase the contract to $428.9 million, if additional work is needed, according to the MTA.

A federal grant and the MTA capital budget are funding the construction.

“Up to this point, East Side Access work at Grand Central Terminal has been largely unseen by the public,” Dr. Michael Horodniceanu, President, MTA Capital Construction, said in a statement.

“This contract finally brings the construction from 140 feet below-ground up to the dining concourse at GCT and in other places where the public will finally start to see what’s been going on right underneath their feet.”

In the Second Avenue Subway case, the company, along with Shea and Kiewit, were reportedly hit with $12,000 in OSHA fines for not properly securing the blast site.

The MTA said that Schiavone has been under oversight by the MTA since 2010.

"As part of the independent assessment, the assessor reviewed Schiavone’s [Disadvantaged, Minority, Women's Business Enterprise] D/M/WBE compliance policies and procedures, due diligence processes and employee training to ensure that only subcontractors able to perform commercially useful functions are engaged to perform toward D/M/WBE contract goals," spokesman Aaron Donovan said.

"The assessor has concluded that Schiavone’s compliance program is 'best in class.'" 

A legal representative for Schiavone referred all questions to the MTA.